Lancaster v. Fox, Jr.
72 F. Supp. 3d 319
D.D.C.2014Background
- In 2006, Junius Lancaster ended up deeded title to 1125 Allison St. NW through a foreclosure-rescue scheme run by Metropolitan Money Store; two deeds of trust (one for $288,000 and one for $72,000) were recorded, and Lancaster alleges his signatures on the deeds of trust were forged and that he did not understand he had acquired the property.
- The mortgages went into default; MERS was the nominee beneficiary on the recorded deeds and later executed an assignment conveying at least the larger deed to HSBC in 2009.
- Lillie Fox (the prior owner) sued Lancaster for quiet title; she died, her heir Beverly Fox later entered a contract to buy the property from Lancaster but defaulted, and Lancaster did not pay taxes; the District sold a tax certificate to Caz Creek, which later filed a redemption-foreclosure action in Superior Court.
- Lancaster sued in Superior Court in May 2014 to quiet title against 14 defendants; several defendants removed the case to federal court on diversity grounds; this Motion to Dismiss was filed by HSBC, MERS, Ocwen, and Litton (plus related servicers).
- The court treats the complaint allegations as true for Rule 12(b)(6) purposes and considers attached public records; it grants dismissal as to Ocwen and Litton for lack of pleaded interest but denies dismissal as to HSBC and MERS because they appear to retain interests in at least one deed of trust.
- The court also rejects dismissal on statute-of-limitations, laches, and unclean-hands grounds at this stage, finding those defenses premature given factual disputes (including whether instruments are under seal and whether Lancaster pleaded superior title sufficiently).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Ocwen and Litton are proper parties | Lancaster says discovery will reveal their interests/knowledge | Ocwen and Litton have no ownership interest or wrongdoing alleged | Dismiss Ocwen and Litton without prejudice for failure to plead any interest |
| Whether MERS and HSBC should be dismissed for lack of interest | Lancaster alleges MERS/HSBC retain interests via recorded deeds/assignments | Defendants say MERS assigned interests to HSBC and thus lacks remaining interest | Deny dismissal as to MERS and HSBC; documents suggest MERS retains interest in the second deed while HSBC holds the first |
| Whether statute of limitations bars the suit | Lancaster contends longer limitations (12- or 15-year) may apply because deeds may be sealed instruments or action seeks recovery of lands | Defendants argue the 3-year catchall applies and claims accrued in 2007 | Deny dismissal on limitations ground as premature; factual questions (sealed instruments, nature of action) preclude ruling now |
| Whether the complaint fails on merits (superior title, laches, unclean hands) | Lancaster alleges forgery and seeks quiet title; argues he sued earlier and raised forgery defensively | Defendants assert Lancaster lacks superior title, delayed suit (laches), and has unclean hands from participating in the scheme | Deny dismissal on these grounds at Rule 12(b)(6) stage; plaintiff has pleaded a prima facie title claim and defendants have not shown prejudice or inequitable conduct as a matter of law |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (a complaint must state a plausible claim to survive dismissal)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleadings)
- Murray v. Wells Fargo Home Mortgage, 953 A.2d 308 (D.C. 2008) (word "seal" near a signature can create a sealed instrument subject to a 12-year limitations period)
- Martin v. Carter, 400 A.2d 326 (D.C. 1979) (laches requires prejudice plus unreasonable delay)
- Sparrow v. United Air Lines, Inc., 216 F.3d 1111 (D.C. Cir. 2000) (pleading and inference rules on motions to dismiss)